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NZD weakens amidst Federal Reserve Announcement

NZD - New Zealand Dollar

Like with the AUD, the New Zealand Dollar also saw a tumble against the USD due to the FOMC announcement. As expected the Federal Reserve reduced its target range for the funds rate by 25bps, to 2.00% - 2.25% and notified it would also stop its balance sheet reduction. The market reacted positively to the FOMC statement, with the USD rising across the board.

The Kiwi also experienced earlier falls when the ANZ Business Survey released figures were lower than expected, causing the NZD to underperform against most of the G10 currencies.

It will be a busy week for the NZD next week where Unemployment figures and Cash Rate announcement are scheduled for Tuesday and Wednesday respectively. Both expected to have a major impact on the currency, optimists are hoping that this is the turnaround for the NZD.

Key Movers

The US-China trade talks ended with no deal in sight. Treasury Secretay Mnuchin and Trump negotiator Lighthizer left China yesterday, reporting that there has been no breakthrough on either side yet, but agreeing to meet again in Washington in September. Economists predict that a long trade war will cause China more harm than good as they are going through an economic slowdown. Beijing has responded by increasing their spending on infrastructure, which could worsen China’s debt.

In other macroeconomic news, the Bank of England is scheduled to release a flurry of statements this evening relating to the Official Bank Rate. While expectations are that interest rates will hold with a majority vote, we may see major movement still when the announcement is official.

The USD can also see major movements with the release of their Non-Farm Employment Change and Unemployment Rate figures tomorrow night, further pushing the USD higher against the other major currencies.

Expected Ranges

NZD/AUD: 0.9545 - 0.9620 ▲

NZD/CAD: 0.8605 - 0.8690 ▼

NZD/EUR: 0.5880 - 0.5960 ▼

NZD/GBP: 1.8640 - 1.8380 ▲

NZD/USD: 0.6520 - 0.6595 ▼